Section 37: The Good, the Bad, the Ugly



Heard of Section 37? It’s been a huge topic of debate in Toronto. Mayor Tory wants it reviewed, underdeveloped wards want it scrapped, city planners want it reformed, and you—the savvy condo investor—should know exactly how this piece of legislation impacts you and your investment.

What's it all about?

Basically, Section 37 is a section of the Ontario Planning Act that allows developers to contravene specific bylaws with the condition that they provide that community with benefits.

Toronto has strict limits when it comes to how tall and dense developments can be. Let’s say a developer’s putting up a high-rise condo that exceeds those limits. As the saying goes, they’d have to pay to play. Which means sitting down with the local city councillor and brokering a deal. Quid pro quo.

On the face of it, Section 37 looks like an alright way to increase funding for local public works. A way for developers to give back, even. The problem, though, is that these deals are oftentimes unpredictable and arbitrary. Worst case, they result in totally frivolous projects that provide very little value. The question you have to ask yourself is this: how do we define a “community benefit”?

A park? Low-income housing? A statue? A fountain? How about a documentary film? Or Scarborough’s $200,000 Walk of Fame? The definition is totally subjective. It’s up to your local councillor, which is why funds generated from Section 37 don’t always benefit the communities they’re supposed to. What’s more troubling is that some councillors use proceeds from Section 37 as a slush fund for pet projects to curry favour with voters.

And Section 37’s gotten a bad rap with the city’s underdeveloped wards. It’s creating a division of haves and have-nots, where wards undergoing plenty of development are getting access to funds others aren’t.

In March, the Sun outlined the highest and lowest Section 37 funds by councillor and ward. The discrepancies are staggering. At the top, Kristyn Wong-Tang of Ward 27 has a balance of $63, 927, 523. Vincent Cristani of Ward 1 has a balance of $0…

So what?

So, now that you have a better sense of why Section 37 matters, you’re probably wondering: how does it affect me?

As a condo investor, the community benefits developers give to city councillors, either in cash or amenities, come straight out of our pocket, and it could be impacting our condo’s closing price.

What to do? Well, this is how I see it. Section 37 highlights some of Toronto’s outdated zoning bylaws and why they need to be changed. It offers privileged councillors with an opportunity to legally extort money from developers (in other words, us). And it’s not transparent in the least. Already, one city councillor has breached city council rules because of improper dealings…

Part of Toronto’s mandate is that good planning should underpin all new development in the city. If the city’s using Section 37 to offload the expenses of a daycare or an art installment onto developers, what does that say about their ability to plan?

While there’s not much we can do now as condo investors, it always pays to be in the know and to understand that Section 37 can factor into the closing price of your condo. If you have any questions or anything you’d like to add about this contentious piece of legislation, feel free to do so in the comments below. I’m always open to new opinions and keen to learn more! If you want to talk condos (or Section 37, for that matter), get in touch! I love a good chat.

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